Improving Profitability Through Credit Collection

Improving Profitability
Through No-Nonsense
Credit and Collection
Operation
Resource Speaker:
Numeriano Erdulfo “Erling” Sison,CPA, Ll.b.

MORAL PERSPECTIVE OF
CREDIT & COLLECTION DISCIPLINE

GUARANTEEING DEBTS
(Sirach 29: 14-20)
A good man is willing to guarantee his
neighbor’s debts. Only someone who has lost all
sense of decency would refuse to do so. If
someone does this favor for you, don’t forget it;
he has risked his good name for you.

2

(Sirach 29: 14-20)

…… There are some ungrateful sinners who
abandon those also stand behind them, and they
cause them loss of property.
Guaranteeing loans has ruined many prosperous
men and caused them unsettling storms of trouble.
Influential people have lost their homes over it and
have had to go wandering in foreign countries.

3

(Sirach 29: 14-20)

….. A sinner who hopes to make a profit by
guaranteeing a loan is going to find himself
involved in lawsuits. So help your neighbor as
much as you can, but protect yourself against the
dangers involved.

4

LOANS AND REPAYMENT
(Sirach 29: 1 - 7)
Be kind enough to lend to your neighbor when he
needs help. You are keeping the Lord’s command if
you help him. If he needs something lend it to him..
If you are in debt, pay it back as soon as you can. If
you meet your obligations you will always be able to
borrow what you need.

5

(Sirach 29: 1 - 7)
…. Many people treat a loan as something they found
and can keep, causing embarrassment to those who
helped them.
Some people will speak politely, bow and scrape until
they get the loan they want, but when the time comes to
pay it back, they will put it off and say that, it’s
inconvenient, and make lots of worthless excuses.

6

(Sirach 29: 1 - 7)
….. If the lender insists on being paid, he can count
himself lucky to get back half. If he doesn’t insist,
the borrower has robbed him and made an
unnecessary enemy. All the lender will get from him
are curses, insults and disrespect, but never any
gratitude. Many people refuse to lend at all, not
because they are stingy, but because they don’t want
to be cheated if they can avoid it.

7

Elements of Credit

1. Trust / Confidence

2. Risks

3. Term

4. Exchange of Values

8

Basis of Credit

 Character/Trustworthiness
 Capacity/Term
 Capital/Capacity/Capability
 Condition/Risk
 Exchange of Value

9

CREDIT & COLLECTION
PRINCIPLES/PRACTICES
1. Credit is earned; and a privilege, not a right;
2. The financial security, sustainability of the creditor is the
principal consideration rather than the sale of credit target one set
to accomplish;
3. Credit must be granted only to persons possessing the positive
traits and attributes of trustworthiness, integrity, capability and
capacity to earn, save and repay one’s financial obligations;
4. The credibility, collectability and protection of the credit granted
must take precedence over expansion or growth; and, must be
given positive attention, action;
5. Financial soundness, operational effectiveness, efficiency and
security of the creditor must be balanced against risks,
diversification, expansion and profitability;

1. Debtors must not be given credit much more than what
they can reasonably, effectively, efficiently repay;
1. To balance risks of credit granting for growth and
expansion, realistic credit limits be set for the target market
within the geographical areas of operations;
2. Credit must not be extended to one who is habitually
delinquent;
3. Each credit applicant must properly be credit investigated,
evaluated, properly documented, expeditiously registered
with the proper government agency in applicable cases,
faithfully and efficiently collected;
4. Credit must not be motivated and granted principally by
reason of the collateral or security offered. It’s the
collection of the credit granted arising from being a going
concern, which develops positive capacity rather than the
acquisition of the collateral or security;

1. Set a workable system of monitoring, evaluating and
expeditious action and system on perceived and/or actual
credit danger signals from debtors;
1. The credit and collection and sales operations must be in
positive symbiosis to attain overall objective
2. Decisiveness and expeditiousness in collection efforts on
all fronts of collection venues be positively undertaken
within and without the creditor’s organization to prevent,
avoid and minimize bad debts;
3. A bad compromise is better and pragmatic than a long
contentious, expensive litigation – a peso in collection is
better than zero;
4. Don’t cry over spilled milk. Learn from your negligence;
take your loss, write-off the bad account

 Population as it impact on the sales, marketing arena
of commerce and industry;
 The gross national product which reflect the
economic performance of the country;
 The savings potential of the population to determine
their disposable income and which determine to what
sector of the population must be extended or not
liberal or restrictive credit;
 The public sector debt (deficit) which has a direct
bearing in the availability of macro-credit; and, as
stimulus for socio-economic activity, as well as, its
effect on the cost of money;
 The debt service of the country as it directly impact
on public sector’s ability to stimulate the economy;

 The nation’s (and regional) buying and credit
culture for the sales and credit professionals to be
able to develop programs of selling and
marketing; and, credit and collection strategies/
tactics;

 Interest ceilings rates which determine the
cost of money for credit transactions;
 Consumer price index which indicates the
market environment for sellers and buyers in
their interplay in the open market through
credit.

Family Income Expenditure Survey
Adjusted to Inflation 2006

Unadjusted Adjusted

Total Ave. Family Income 100% 2.99T 2.5T
Total Ave. Family
85% 2.56T 2.14T
Expenditure
Total Ave. Family Savings
15% P21,000
per month
Gini Coefficient .4546 .4605

Gini coefficient is the measure of income disparity between classes or
within a population.
The perfect range is; 0-1 with 0 as the perfect income, equality among
classes/families and indicate absolute income disparity or inequality.

Major 2006 2003
Expenditure All Bottom Upper All Bottom Upper
Items Income
Group
30% 70% Income
Group
30% 70%

Total Expenditure 2561 266 2295 2038 212 1827
(Billion) Percent 100% 100% 100% 100% 100% 100%

1) Food Expenditures 41.4 59.1 39.3 43.1 60.2 40.0

2) House Rental 12.7 9.0 13.2 13.1 8.8 13.6
3) Transportation &
8.2 3.8 8.7 7.3 3.2 8.2
Communication
4) Fuel, Light &
7.6 7.3 7.7 6.5 6.6 6.6
Water

5) Education 4.4 1.3 4.7 4.0 1.3 4.5

Major 2006 2003
Items Income
Group
30% 70% Income
Group
30% 70%

(Billion) Percent 100% 100% 100% 100% 100% 100%
1) Personal Care &
3.7 3.7 3.7 3.9 3.7 4.1
Effects

7) Other Expenditures 3.0 3.3 3.0 2.9 3.2 3.3

8) Medical Care 2.9 1.7 3.0 2.2 1.4 2.3

9) Special Family Occasions 2.8 1.7 2.9 2.6 1.6 2.8

10)Durable Furnitures
2.7 0.8 2.9 2.6 0.8 2.8
Fixtures

Major 2006 2003
Items Income
Group
30% 70% Income
Group
30% 70%

(Billion) Percent 100% 100% 100% 100% 100% 100%
11) Clothing, Footwear
Etc. 2.4 2.0 2.5 2.9 2.5 3.0

12) House Operation 2.3 1.8 2.4 2.2 1.7 2.1

13) Taxes 1.6 0.5 0.6 2.1 0.2 2.3

14) Tobacco 0.9 1.7 0.8 1.1 2.0 0.9

15) Alcoholic Beverage 0.7 1.2 0.6 0.7 1.2 0.6

Major 2006 2003
Items Income
Group
30% 70% Income
Group
30% 70%

(Billion) Percent 100% 100% 100% 100% 100% 100%

16) House Maintenance/
Repairs 0.6 0.2 1.8 0.7 0.5 0.8

17) Recreation 0.5 0.2 0.5 0.5 0.2 0.5

Objectives Of Collection Operations
1) Collect credit/loans granted thereby increasing profits;

2) Improve quality of work thru positive cooperation with loan
operations via accurate, expeditious decision, thorough
exercise of the collection functions;
3) Increase loan volume – collected expeditiously within the loan
term;
4) Cost-effective expense per loan granted resulting from
improved planning, direction and supervision;
5) Greater satisfaction to all concerned, resulting from a
attainment of the results that are expected;
6) Dynamic credit and collection operation buttress by skills and
art of the discipline by the rank personnel but most important
the ability to;

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a) Analyze, plan, develop objectives, policies, procedures and
program to have the field personnel performance improve and
attain goals.
a) Build/nurture the collection force;

b) Skills in delegating responsibility and monitoring accountability
for results;
c) Review, appraise collection operation in conformity with the set
goals, objectives, standards, practices and effect remedial
collection efforts wherever, whenever needed;
d) Inspire confidence, motivate for teamwork and maintain
growth;

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Collection Policies
• The Primary Objectives of a No-Nonsense Collection System are:
a. To safeguard the integrity / collectibility of the accounts
receivable;
b. To have a good cash flow via an effective system that secure
prompt payment;
c. Retention of debtors’/customers’ goodwill through use of
policy aging motivating and appealing collection techniques;
d. A workable program for assisting and rehabilitating delinquent
or distressed account/ debtor;
e. The synchronization of the creditor's collection system with the
prevailing economic/ financial conditions;
f. As a check and balance between the sales and credit, collection
operations of a company;
g. As a basis for some incentive program.

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• Collection – Out of Court
• Current Accounts - Any and all individual current account
of customers shall be collected by the sales credit and
collection departments working in tandem;
The maximum period to exert out of court collection efforts
on company’s accounts shall not be more than ninety (90)
days. Thereafter, legal collection effort shall take place to be
undertaken by the attorney of the company taking, into
consideration the feasibility, economics of collection;
• Delinquent Account – the retained or house attorney of the
company shall be responsible for collecting extra-judicially
or legally delinquent accounts depending on the economics
and feasibility of collecting the account;
• Distressed/Bad Accounts – the collection agency or the
attorney engaged by the company shall be tasked, responsible
for the collection of distressed/bad accounts generally under
“contingency fee” basis of collection
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THE SCIENCE AND ART OF COLLECTION
Many people refuse to lend at all, not because they are stingy, but
because they don't want to be cheated if they can avoid it. "
Collecting money claims may they be current, delinquent or bad
account receivables, is a tedious, frustrating, and exasperating
process.
The science and art of collection requires tenacity and immense
fortitude on the part of the collector. The collector's success or failure
is, to a large extent, dependent on his education, knowledge, his
appreciation of the issues and its consequences and on his
experiences.

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A collector can improve his collection by effectively using the
basic tools of his trade - the accepted paradigms and principles of
credit and collection discipline, the law trade practices, habits and
idiosyncrasies of debtor. Collection, as all collection practitioners
know, is really a science and an art.

Science of collection deals with credit policies and procedures;
the art is implementing them. The science and art of collecting can
untie huge amounts of accounts receivable, thereby helping
strengthen the financial stability of a company by infusing the
company with its lifeblood - cash.

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FORCES OF COLLECTION

I - Salesmen
• A sale is never a sale unless collected;
• Sales commissions must be paid only on collected
sales within the credit term;
• Sanction and penalty for uncollected sales beyond
the credit term;
• Incentive for efficient collection of credit, sales
within the credit term
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II- THE HOUSE COLLECTORS
Matters to Consider:
• Collection area knowledge and familiarity;
• Population of number of customers;
• Transportation facilities;
• Habits, practices, idiosyncrasies of the collection
area.

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Attributes to Look for in Collectors:
 Integrity, industriousness,
resourcefulness, initiative, tenacity,
perseverance
 Good grooming, neatness
 Happy disposition, adaptability to
situations
 Working knowledge, skills in arithmetic
 Businesslike, tactful, courteous, must
have practical judgment specially in
dealing with people-debtors
 Time consciousness and management
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Collectors’ Contributions to Overall Marketing-Sales Goal
• Assist in bringing in more good collected sales
• Contributes to low delinquency
• Contributes to good liquidity

Controls over Collectors:
• Surprise audit of collectors’ receipts, reports;
• Field audit;
• Rotation of collectors from the collection area they
are assigned unless there is a good reason not to

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III- ATTORNEYS (LEGAL COUNSELS)

The time and advice of an attorney are his stock in trade

• Things to look for in an attorney:

 Education, training, experience;

 Personality, positive character,
attributes

 References – clientele, adversaries
in practice

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Things to provide for:

• Agreement to avail of attorney’s services:

 Scope of service – actual / contingent expenses

 Remuneration package

 Expenses, allowances

 Time and payment of pecuniary benefit

 Control over amicable & compromise efforts

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IV- COLLECTION AGENCIES

Things to look for: Things to provide for:

 Length of service • Scope of services agreement
– contingency or per case
 People behind the company
• Rates of fees and taxes and
 Finances time of payment

• Reimbursable expenses
 Manpower complements
• Withdrawal or Termination
 Clientele, references Mechanisms
 Areas of operation • Confidentiality Clauses

• Others
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V- GOVERNMENT

Accounts for write-off must be covered by an affidavit of
the collection company or the attorney who conducted the
collection efforts out of or through court narrating the
collection efforts undertaken as well as any checking on
debtor’s properties - short of going to court to collect.

36

Tools and Aids in Collecting

1) Notice Reminder

2) Letters

3) Statement of Account

4) Third Party Letter

5) Cables/Telegrams/E-Mails

6) Telephone

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Delinquent Accounts Management

“It’s better that you should not vow than that you
should vow and not pay”

Ecclesiasticus 5:5

Elements of Delinquent Accounts
• Cause
• Cure
• Collection Efforts

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Effects of Delinquency In Receivables

1. Delinquency ties-up working capital;

2. It disrupts and complicates business operations;

3. It reduces profit targets;

4. It slows down growth;

5. It causes personal and business failure;

6. It prevents the build-up of reserves for seasonal or long-
term demands;
7. The creditor (if not a bank or a financial institution)
becomes the debtor's unwitting banker - generally interest-
free.

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Causes of Delinquency in Receivables:

1. Internal Causes:
a. Absence or insufficiency of a credit report;
b. Absence of proper documents or simply the failure to
register the debt documents in applicable cases;
c. Poor or faulty accounting system;
d. Unsystematic collection efforts;
e. Family, business or other social relationships
between the creditor and debtor;

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2. External Causes:
a. Over-obligation on the part of the debtor or getting
into debt regardless of capacity to pay;
b. Oversight (witting or unwitting);
c. Bad paying habits and practices;
d. Indolence (most debtors are too lazy to go and pay
their creditors);
e. Personal or business reverses or misfortunes;
f. Dissatisfaction, whether founded or unfounded;
g. Habits, practices and idiosyncrasies of the debtor.
h. Force majeure, fortuitous events;
i. New laws
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General Types of Debtors

1. Up-to –Date (DOG)

2. Occasional Delinquent (Monkey)

3. Habitual Delinquent (Lizard, Turtle)

4. Changed Circumstance Delinquent (Chameleon)

5. Premeditated Delinquent (Crocodile)

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Categories of Debtor’s Defenses

1. Offensive/Aggressive - uses offense
as defense
2. Denial / Evasion

3. Defiance

4. Plea For Sympathy & Compassion

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KINDS OF DELINQUENT DEBTORS
1. Negligent
2. Honest but confused
3. Can’t be bothered
4. Seasonal delinquent
5. Honest late payer
6. Chronically slow
7. Wittingly late
8. Credit stretcher
9. Habitual discounter
10. Tight rope walker – debtor
11. Braggart (mayabang)
12. Vanishing debtor (Houdini)

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BASIC COLLECTION APPROACHES
• Education - at the onset of the creditor-debtor relationship it is
always practical and good collection management technique
to indoctrinate the debtor about the credit and collection
policies and procedures of the creditor.
• Persuasion “artful intimidation" - It must be borne in mind
that persuasion, to be effective and acceptable, must be done
with firmness and in the “friendliest “atmosphere possible
• Problem Solving Assistance - Your success or failure in this
aspect of collection problem will have an impact on your long
term relationship with the debtor. You must not only be a
good creditor in good times only but in bad times as well.
• Coercion - Coercion must be applied only when really
needed. Any form of coercion must be valid and legal. When
coercion is decided upon, apply it promptly and to its full
extent

45

Stages of Collection Efforts

Stage Collection Tools Used Debtor(s) Involved

Statement of Account Those expecting notice
Statement Honest debtor who
inserts/stickers overlooked payables

Notes on statement Temporarily financially
1. Impersonal
from embarrassed
Effort
letter reminder Careless,
These collection tools procrastinating
are used generally after debtor
expiration of credit
term
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From letters appealing Honestly overlooked
to: payables
a. “Anything wrong or
anything we can do?”
tone or “Tell your us
story” approach
b. Pride in -credit Temporarily, financially
2. Impersonal
standing / reputation; embarrassed
Appeals
sense of fairness
c. Replies from this Bought/loaned too
debtor are either by much Accident or
telephone, cables/ misfortune
telegrams, special
letters, third party reply

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3. Personalized Personal Collection Overbought / loaned
Efforts (Collector) Debtor who may
eventually become
delinquent / insolvent

Telephone Calls Accident / misfortune
Personal Interview Fraud

No intention of paying
debtor,
Personal letter to: employer/company,
officer
Disputed Account
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Repayment / Overbought/loaned
Restructuring Debtor who delinquent
4.Coercive or
Agreement / insolvent
Legal Efforts
Assignment/ Accident/misfortune
collateralizing,
securing debt replevin
proceedings
Foreclosure or No Fraud
intention to pay

Legal action through an Disputed Account
Attorney and/or
collection
Agency
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Practical Ways To Have Better
Liquidity/Profits In Collection
1) Factor/Discount Accounts
a) Credit Card
1) Leverage Collection/Payment Thru
a) Discount
b)Rebates
c) Penalty
1) Prudent Write-off/Bad Accounts Mitigate Tax
Liability
2) Collection/Sales Incentive Program
3) Counseling
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10 Rules to Collect & Get Paid
I. Those Who Want to Get Paid, Must Insist on Payment-
On Time.
To be able to get paid, endeavor to be positively serious in
the following aspects of your receivable administration.
Having positive policies and procedures that will keep you
make cost effective efficient credit decision and action.
It is people who collect, not tools, machines or papers. Make
it a policy to train yourself, your people in the science and
arts of no-nonsense collection management. Many creditmen
do not really know have to collect. It’s trial and error method
of collecting.
Educate and communicate with your debtors for them to
understand your credit and collection policies and
procedures.
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• Use Your Aging Schedule Positively And
Aggressively

• Always Be a Good Creditor in Good or Bad Times.

• Stand your Ground

• Don’t Hesitate, Enforce Your Credit

• Never Threaten, Unless You Mean and Do Your
Threat

• Have a Team

• Get Assistance Soonest

• Act Decisively to Collect Legally

• Collecting Something is Better than Nothing 52

Tell-Tale Signs of Financial Dangers in Debtor/
Company Under Stress
Financing difficulties, problems in meeting financial
obligations;
Operating troubles;
Lack of operating success as reflected in continuing
operating losses; poor control over operation such as:
 Restructuring / liquidation process;
 Slowdown of payments to current creditors;
 Failure to pay dividends;
 Declining share of market
 Down-grading of credit rating;
 Loan / bond interest or principal payment defaults;
 Overdrawn bank accounts;
 Illiquidity
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Financial Danger Signals to Watch For
Financial difficulties do not happen overnight. It is
always preceded by months or years of negligence and cracks in
the foundation of the company.
Patterns of this worrisome condition existing over a long
period of time should and must expeditiously be investigated
and attended to, promptly.
Weak Internal Controls
Some of this operational activities are:
 Delayed submission or frequent adjustments in the
financial reports;
 Cash disbursements are not disbursed by one who does
not maintain the financial records;
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 The audit and compensation committees are not composed
of qualified members (outsiders);
 Generally accepted accounting / auditing standards/
practices are frequently bent or not followed;
 Shortage of disposable free cash. It’s important to determine
the source of cash for a company.
Does cash come from:
Operations
Borrowings
Credit stretching
Other unconventional sources
 Artificial low inventory;

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 Extra-ordinary or non-recurring asset disposal;
If there is insufficient cash to pay current payables, there
exists a problem.
 Susceptibility to extraneous factors:
 Dependence on one or two product lines, customer is a
sign of instability
 Reliance or changes in politics, government policies,
regulations make one vulnerable.
 Insufficient checks and balances.
The directors, auditors, attorneys, consultants must be called
upon to provoke, challenge, critique and rationalize important
business or company issues to prevent / avoid risk problems;
 Poor organization structure;

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The indication of poor organizational structure are;
 No continuity of succession plan;
 Reliance and dependence on one or two individuals in the
organization;
 Distraction from outside non-core activities;
 Excessive overhead at the top management;
 Under/overpaid staff in relation with industry’s
average/standards;
 Unindexed compensation package in relation with
performance;
 Excessive perks;
 Irrational compensation or marketing policies that stresses in
short term than long term results or gains;
 Uneven revenue growth

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Business revenues showed by growing in line with competitors.
Losing market share, generating revenue through injudicious
extension of credit to marginal accounts triggers this situation.
 Imbalance between receivable and inventory
Watch out for illogical increase in inventory and account
receivables as against slow or poor sales vis-à-vis industry
standards.
 Ambivalent profitability
Shrinking gross margins, increasing administrative expenses,
decreasing revenues, apparent profit brought about by accounting
entries, discretionary expenses arbitrarily reduced for research and
development, maintenance, promotion and advertising.
 Non-recurring financial transaction
Partake of a single, irregular gains arising from sale of asset, high
bad debt write-off, obsolete inventory and failed investments.

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• Inefficient financial structure
Complex, bureaucratic financial, legal structure
aggravates a company’s operations. Inefficient and
intra-company borrowings, payments of a group of
companies; debt conversion to equity due to distressed
and illiquid condition
• Cash flow statement
The generally used current ratios, and debt to equity
ratios do not reveal the naked financial facts and
realities of a company or debtor.
When probing a company’s / debtor’s liquidity or
capacity to repay debts, rely on its cash flow statement
because it’s more reliable and realistic.
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Factors to Consider in the Management
of Distressed Accounts:
1. The prevailing social, economic, political and business conditions
in the locality where the company operates. Will there be a
recovery? Is there a chance of survival?
2. The perspective of the account - Is there still something to
turnaround?
3. To which industry does the debtor belong?
a. Sunrise - Those identified by business and government as
having the brightest growth prospects in the market. Among
these are electronics, manpower recruitment, textiles, food,
leather goods, garment products and wood products.
b. Sunset Industries - Generally those that supply the country's
traditional exports (mining, logging, sugar, copra and others).

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4. Liquidity prospects of the debtor - What effective
plans does the debtor have to improve his liquidity?
5. Accurate reporting of costs - The distressed condition
of business sometimes is generally caused by
inaccurate reporting of costs.

6. Inflation hedges - Does the company have physical
assets that it can fall back on in times of distress?

7. Productivity - Economists agree that the best antidote
to inflation and recession is the ability to produce
more efficiently and economically.

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• Assets - There are many instances of distressed companies
warding - off moves by creditors to declare them bankrupt
due to the availability of worthwhile assets that creditors
can depend upon.

1. The quality and reputation of a company's top
management - Creditors are inclined to look favorably
on request for aid from companies whose top management
is widely respected for their integrity, credibility and
trustworthiness.

10.Connections - How many distressed companies in the
70s and 80s were there that no clear thinking creditor
would have touched them even with a ten-foot pole were it
not for those companies' “powerful" connections'?

63

Major Causes of Distressed Accounts
• Borrowing too much in relation with actual capital
requirements - Negligence, lack of government policies and
controls, the greed of owners are important reasons for
corporate failures.
• Hasty expansion - Too often, borrowers get so carried
away by their initial success in their chosen line of business
that they convince themselves that they can also succeed in
business they know nothing substantially about.
• Lack of professionalism, nepotism and cronyism - Mixing
business with family and friends is a mixture that is bound to
achieve only one thing - conflict and failure.
• Lack of adequate controls - Many companies have folded
up due to owner - initiated fraud.

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• Over-confidence in "connections" - A powerful
connection in government or in business cannot
guarantee success.
1. Lack of integrity or character of the people who own or
manage the company.

2. Being in the wrong industry at the wrong time - It
helps if a business belongs to one of the "sunrise
industries." Opening a business in a sunset industry
limits growth and will limit profitability no matter how
dedicated and hardworking its management and
employees are.

3. Change in the nature of the business - This may be
caused by law, force majeure or by the unstudied desire
of the owners.
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1. Poor financial planning - This usually means:
a. Inability of management to understand how capital
intensive are the company's account receivables,
capital goods and assets, particularly in inflation-hit
operations.
b. Failure to understand the effects of high short-term
interest rates on declining profits.
c. Using high-cost money on fast-maturing long-term
debts aggravated by poorly planned repayment
programs.

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1. Other causes of distressed accounts:
a. Complicated and bureaucratic corporate structure.
b. Entering into substantial long-term contracts with
customers, suppliers and lessors without proper
contractual safeguards for the company.
c. Negligence or the non-enforcement of collection
and payment programs; and, too much reliance on
fast depreciating or liquid collateral.
d. No fall-back or crisis support, particularly in debt-
servicing and in operations.
e. An eccentric management

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FINANCIAL MANAGEMENT CRITICAL AREAS
IN A DISTRESSED ENVIRONMENT
CRITICAL AREAS CRISIS STAGE STABILIZATION TURN-AROUND
PERIOD STAGE

1. CASH PLUG ALL TRIM DOWN DELIBERATELY
FLOW CASH FLOW LOOSE EARMARK
OUTLETS AND UNNECESSARY ANY SURPLUS
FIND OUT PAYMENTS TO TO PROMISING
WHERE YOU INCREASE GROWTH
STAND THEN LIQUIDITY. AREAS.
IMPOSE UNILA-
TERAL CONTROLS
TO GET TO A
POSITIVE CASH
FLOW.

2. PROFITA- ADOPT DRASTIC CONTINUE ONLY DETERMINE
BILITY COST REDUCTION THOSE OPERA- POSSIBLE
IN AREAS THAT TIONS W/C WILL TRADE-OFFS OF
DO NOT CONTRI- GIVE OR CONTRI- SOME SHORT
BUTE TO A BUTE TO A TERM TARGETS
POSITIVE CASH REASONABLE FOR LONG
FLOW. POSITIVE RESULT. TERM OBJECTIVES
68

CRITICAL AREAS CRISIS STAGE STABILIZATION TURN-AROUND
PERIOD STAGE
3. CREDIT MINIMIZE OR EXERT AND INTERNAL
MANAGEMENT AVOID GETTING ENDEAVOR TO SOURCES OF
INTO DEBT UNLESS REPROGRAM FINANCING
NECESSARY AND DEBTS TO GET TO CONSERVE
IF NEEDED GET EITHER SHORT ANY AVAILABLE
INTERIM FINAN- OR LONG TERM AND ACCUMU-
CING INSTEAD. ADVANTAGE LATED CASH.

4. WORKING AVOID PAYING CURTAIL CASH INCULCATE &
CAPITAL IF YOU CAN; STRETCH OUT OF LOOSE MAINTAIN TIGHT
YOUR CREDITS SYSTEM. FINANCIAL
TO THE MOST DISCIPLINE.
TOLERABLE POINT.
RESTRICT & COLLECT
RECEIVABLES, COSTS
& INVENTORIES.

5. CAPITAL AVOID UNNECESARY BE PRUDENT, REASONABLY
ASSET ACQUISITION DISCREET AND ADD FOR
ACQUISITION EXCEPT THOSE RELY ON STRATEGIC
NEEDED BY BASIC INTRINSIC GROWTH
BUSINESS SOURCES. CONSIDERATIONS

69

Rules of Procedure for Small Money Claims

I. Scope:
Rules of procedure in actions before municipal/city
courts.
1. Value of Claim:
 Not more than Php100,000.00 pesos exclusive of
interest.

1. Definition of Terms:
Plaintiff – the party who initiated a small claim
action; includes a defendant who filed a
counterclaim against the plaintiff.
70

• Defendant – the party against whom the plaintiff has filed a
small claim action. It includes a plaintiff has filed whom a
defendant has filed a claim or person who replies to the claim.

• Person – is an individual, corporation, partnership, limited
partnership, association or other juridical entity endowed
with personality by law.

• Individual – is a natural person.

• Motion – a party’s request written or oral, to the court for an
order or other action. It shall include an informal written
request to the court such as a letter.
• Good course – circumstances sufficient to justify the
requested or order or other action, as determined by the
judge.

71

• Affidavit – a written statement or declaration of facts that
are sworn or affirmed to the true.
1. Applicability:
b. Applies to purely civil case in nature where the claim or relief
prayed for by the plaintiff is solely for payment or
reimbursement of sum of money; or
c. The civil aspect of criminal action, either filed before the
inclusion of the criminal action , or reserved upon the filing of
the criminal action in court, pursuant to Rule III of the
Revised Rules of Criminal Procedures.

1. The claim or Demand may be-
b. Money owed by reason of a lease, loan, services, sale or
contract of mortgage;

72

a. For money claims/demands arising from either
 Fault or negligence
 Quasi-contract or
 Contract
e. Enforcement of a barangay amicable settlement or an
arbitration award involving ac money claim (Sec. 417 R.A.
7160 – Local Government Code).

II. How is small claim commence-
2. A small claim is commenced upon the filing of a verified
statement (affidavit) of claim (Form 1-SCC) in duplicate
accompanied by a certification of non-forum shopping)
Form 1-A-SCC and,

73

1. Duly certified copies of the actionable document
(or evidence of the claim);
2. Affidavits of witnesses and other evidence to
support the claim;
3. No evidence is allowed during the hearing which
were not attached to or submitted together with
the claim, unless good reason is shown for its
admission as additional evidence.
No formal pleading, other than the statement of
claim prescribed under this rule is necessary to
initiate a small claim.

74

• Consolidation Claims- plaintiff may join in a single
statement of claim one or more small claims against
a defendant, provided that the total amount
claimed, exclusive of interest and costs, does not
exceed Php100,000.00.
• Affidavits – the affidavit submitted under this rule
shall state only facts of direct personal knowledge of
the affiants which are admissible in evidence;
 Violation of this rule shall subject the party and the
counsel who assisted in the preparation of the
affidavits, if any, to appropriate disciplinary action.
The inadmissible affidavit(s) or portion shall be
expunged from the record.

75

1. Payment of Filing Fees:
b. Plaintiff shall pay the docket and other legal fees prescribed
under Rule 141 of the Rules of Court, unless allowed to
litigate as an indigent.
c. An indigent litigation must accomplished form 6 SCC, and
referred with executive judge for immediate action in court
of multi-sala courts or to the presiding judge of the court
hearing the case. If the motion is granted, the case shall be
raffled off-or assigned to a court designated to hear the case.
d. If motion to litigate as indigent is denied, the plaintiff has
five (5) days within which to pay the docket fees, otherwise,
the case is dismissed without prejudice.

76

 In no case shall a party, even if indigent litigation be
exempt from paying the Php1,000.00 fee for service of
summons and processes of the court.

 Dismissal of the Claim – a small claim maybe dismissed
outright if the evidence by itself does not proved the claim
such as those reasons provided in dismissing a civil action.
 Rule 16 (Rules of Court)
Grounds for Motion To Dismiss for cases more than
Php100,000.00 under regular courts.
4) Court has no jurisdiction over the person of the defendant
or over the subject of the action or suit;

77

1) Court has no jurisdiction over the nature of the
action or suit;
2) Venue is wrong;
3) Plaintiff has no legal capacity to sue;
4) There is another action pending between the
same parties for the same cause;
5) Cause of action is barred by a prior judgment or
by statute of limitation;
6) Complaint state no cause of action;
7) The claim or demand set forth in the plaintiff’s
pleading has been paid, waived, abandoned or
otherwise extinguished.
78

1) The claim on which the action or suit is
founded is unenforceable, covered by the
statute of frauds.
2) The suite is between members of the same
family and no earnest efforts towards a
compromise have been made.

1. Summons and Notice of Hearing
b. If no ground for dismissal is found, the court shall
issue summons (Form 2 –SCC) on the day of
receipt of the statement of claim, directing
defendant to submit a verified response.

79

a. A notice to both parties (Form 4-SCC) to
appear before the court an a specific date,
time of hearing with warning for unjustified
postponement.
b. The summons and notice to be served on the
defendant shall be accompanied by a copy of
the statement of claims and documents
submitted by the plaintiff, and a copy of the
response (Form 3-SCC) to be accomplished by
the defendant.
c. The notice shall contain an express
prohibition against the filing of a motion to
dismiss or any other motion under Rule 14 of
this rule.
80

1. Response
a. Defendant shall file with the court and serve upon
plaintiff a duly accomplished, verified response within a
non-extendible period of ten (10) days from receipt of
summons.
b. The response shall be accompanied by certified
photocopies of documents, as well as affidavits of
witnesses and other evidences in support thereof.
c. No evidence shall be allowed during the hearing which
was not attached to or submitted together with the
Response, unless good course is shown for the admission
of additional evidence.

81

• Effect of Failure to File Response- failure of defendant to
file a timely Response the court shall render judgment as
maybe warranted by the facts alleged in the statement of
claim limited to the what is prayed for without prejudice at
the discretion of the court to reduce the amount claim for
being excessive or unconscionable.
• Counterclaim Within the Coverage of the Rule
c. If at the time the action is commenced, defendant possesses a
claim against the plaintiff that;
a-1- is within the coverage of this Rule; exclusive of interest and
costs;
a-2- Arises out of the same transaction or event that is the subject
matter of plaintiff’s claim.

82

a-3 – Does not require for its adjudication the jointly of
third parties.
a-4 – Is not the subject of another pending action the claim
shall be filed as a counterclaim in the Response
otherwise, the defendant shall be barred from suit on
the counterclaims.
a-5 – Defendant may also elect to file a counterclaim
against the plaintiff that does not arise out of the same
transaction or occurrence and nature thereof are
within the coverage of this Rule and the prescribed
docket and other legal fees are paid.
4. Prohibited pleadings and motions:
e. Motion to dismiss except on the ground of lack of
jurisdiction.

83

a. Motion for Bill of particular.
b. Motion for new trial or for reconsideration of a
judgment or for reopening of trial.
c. Petition for relief from judgment.
d. Motion for extrusion of time to file pleadings,
affidavit or any other paper.
e. Memoranda.
f. Petition for certiorari, mandamus, or prohibition
agent, any interlocutory order issued by the court.
g. Motion to declare defendant in default.
h. Dilatory motion for postponement.
84

a. Reply.
b. Third party complaints; and
c. Intervention.
• Availability of Forms; Assistance of Court Personnel-
The clerk of court or other court personnel shall provide
such assistance as maybe requested by the parties as the
availability of forms and other information about the
coverage, requirements and procedure for small claims
cases.
• Appearance –
f. Parties shall appear at the designated date, time of
hearing personally or;

85

a. Through a representative duly authorized under a special
power of attorney (Form 5 –SCC) to enter into an
amicable settlement, to submit to mediation, and to enter
into stipulations or admissions of facts and of
documentary exhibits;
b. An attorney for either party is prohibited to represent any
of the parties unless the attorney is the plaintiff or
defendant himself/herself;
c. If the court determine that a party cannot properly
present his/her claims or defense and needs assistance,
the court may in its discretion, allow another individual
who is not an attorney to assist that party upon his/her
consent.

86

1. Non-Appearance of Parties –
b. Failure of the plaintiff to appear shall a cause for the dismissal of
the claim without prejudice.
c. The defendant who appears shall be entitled to judgment on a
permissive counter-claim.
d. Failure of the defendant to appear shall have the same effect as a
failure to file a response under Sec. 12 of this rule.
e. This shall not apply where one of two or more defendants who
are sued under a common cause of action and pleaded a
common defense appears at the hearing.

87

a. Failure of both parties to appear shall cause of dismissal of the
case with prejudice of both the claim and counterclaim.

• Postponement – Upon proof of the physical inability of the
party to attend an scheduled date and time only one
postponement is allowed the parties.
• Reading of the nature, purpose and rules of procedure of small
claim.
• Judicial Dispute Resolution(JDR)
d. The judge shall conduct JDR through mediation, conciliation,
early neutral evaluation or any other mode of JRD
e. Any settlement (Form 7-SCC) or resolution (Form 8-SCC) of the
dispute shall be reduced into writing, signed by the parties and
submitted to the court for approval (Form 12-SCC).

88

• If JDR fails and the parties agree in writing (Form 10-SCC) that the
hearing of the case shall be presided by the judge who conducted
the JDR, the hearing shall proceed in formally expeditiously and
terminated within one (1) day.
• Absent such agreement :
d-1 – In case of a multi-sala court, the case shall on the same day, be
transferred (Form 11-SCC) to the office of the Clerk of Court for
immediate referred by the Executive judge to the pairing judge for
hearing and decision within five (5) working days from referral
and;
d-2 – In case of a single sala court. The pairing judge shall hear and
decide the case in the court of origin within five (5) working days
from referred by the JDR judge.

89

1. Decision:
b. After the hearing, the court shall render its decision and the
same day based on the facts established by the evidence
(Form 13-SCC)
c. The decision shall immediately be entered by the court
dockets and a copy thereof served on the parties.
• Execution – if the decision is in favor of the plaintiff
execution shall be issued upon motion (Form 9-SCC)

Guidelines in Auction Sale of Real and Personal
Properties

90

• Rules of Procedures Application – The Rules of Civil
Procedure shall only apply in supplementation as they
are not inconsistent with this Rule.

91

FORM 1-SCC
REPUBLIC OF THE PHILIPPINES
______________________________
______________________________

____________________,
Plaintiff,
vs. Civil Case No. _____________
For : _____________________
______________________,
Defendant.
X--------------------x
92

STATEMENT OF CLAIM
Plaintiff respectfully alleges:
3. The personal circumstances of the parties re as follows:
NAME OF PLAINTIFF/S SEX AGE CIVIL STATUS
____________________ ____ ____ _____________
NAME OF REPRESENTATIVE:____________________
ADDRESS ZIP CODE
_____________________________________ ___________
NAME OF DEFENDANT/S SEX AGE CIVIL STATUS
________________________ ____ ____ _____________

93

INDIVIDUAL __ CORPORATION_ PARTNERSHIP _
SOLE PROPRIETORSHIP __
NAME OF REPRESENTATIVE ____________________
ADDRESS ZIP CODE
_____________________________________ ___________
6. Plaintiff is suing defendant for:
CAUSE OF ACTION
_____ Collection of Sum of Money
_____ Damages
_____ Civil Aspect of Criminal Case
_____ Enforcement of Barangay Agreement

94

1. Plaintiff’s cause of action arose from and is evidenced by:
ACTIONABLE DOCUMENT/S AFFIDAVIT/S
_____ Promissory Note/Undertaking How Many ____
_____ Contract/Agreement
_____ Receipt
_____ Others
7. The principal obligation of defendant/s amounting to
Php___________ became due and demandable on
___________. Interest at the rate of ____% per annum/per
month accrued on the principal sum due from such date of
default.

95

1. Despite repeated demands by plaintiff, the latest of which
was on ______________, defendant has failed to pay the
obligation.
2. _____ (a) This claim has been referred to the appropriate
barangay authorities but no settlement was reached
between the parties. A Certificate to File Action was issued
to the plaintiff, the original of which is attached hereto.
_____ (b) The parties are not covered by the barangay
mandatory conciliation process under the local
Government Code of the Philippines.

96

Prayer
WHEREFORE, plaintiff respectfully prays for
judgment to be rendered ordering defendant to pay plaintiff
the amount of Php_________________ with interest at the
rate of ____% per annum/per month, from ______________,
until fully paid.
_______________________; __________ 20 _____.
PLACE, WHERE FILED

PLAINTIFF

97

FORM 1-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No. _____________
For : _____________________
___________________________
Defendant.
X---- ------------------x

98

STATEMENT OF CLAIM
Plaintiff respectfully alleges:
3. The personal circumstances of the parties are as
follows:
NAME OF PLAINTIFF/S SEX AGE CIVIL STATUS
____________________ _____ _____ _____________
INDIVIDUAL ____ CORPORATION ____ PARTNERSHIP ____
SOLE PROPRIETORSHIP ______
NAME OF REPRESENTATIVE: ___________________________
ADDRESS ZIP CODE
__________________________________ ___________

99

NAME OF DEFENDANTS//S SEX AGE CIVIL STATUS
________________________ ____ ____ _____________
INDIVIDUAL ___ CORPORATION ___ PARTNERSHIP___
SOLE PROPRIETORSHIP ___
NAME OF REPRESENTATIVE: _______________________
ADDRESS ZIP CODE
____________________________________ ____________
8. Plaintiff is suing defendant for:
CAUSE OF ACTION
____ Collection of Sum of Money
____ Damages

100

_____ Civil aspect of Criminal Case
_____ Enforcement of Barangay Agreement
3. Plaintiff’s cause of action arose from and in evidenced by:
ACTIONABLE DOCUMENT/S AFFIDAVIT/S
_____ Promissory Note/Undertaking How many:____
_____ Contract Agreement
_____ Receipt
_____ Others.
9. The principal obligation of defendant/s amounting to
Php______ became due and demandable on__________. Interest
at the rate of _____% per annum/per month accrued on the
principal sum due from such date of default.

101

1. Despite repeated demands by plaintiff, the latest of which
was on ______________________, defendant has failed to
pay the obligation.
2. _____ (a) This claim has been referred to the appropriate
barangay authorities but no settlement was reached
between the parties. A Certificate to File Action was issued
to the plaintiff, the original of which is attached hereto.
_____ (b) The parties are not covered by the barangay
mandatory conciliation process under the Local
Government Code of the Philippines.

102

Prayer
WHEREFORE, plaintiff respectfully prays for judgment
to be rendered ordering defendant to pay plaintiff the amount
of Php______________ with interest at the rate of _____% per
annum/per month, from ____________, until fully paid.
_____________________; ____________ 20___.
PLACE WHERE FILED

PLAINTIFF

103

FORM 1-A-SCC
VERIFICATION AND CERTIFICATION OF NON-FORUM
SHOPPING
I, __________________________________, of legal age,
(NAME)
_________________________________, and a resident of
__________________________________________.
After having been duly sworn to in accordance with law,
hereby, depose and say:

104

1. That I am the ________________ in the above-entitled case
and have caused this ______________________ to be
prepared; that I read and understood its contents which are
true and correct of my own personal knowledge and/or
based on authentic records.
2. That I have not commenced any action or proceeding
involving the same issue in the Supreme Court, the Court of
Appeals or any other tribunal or agency; that to the best of
my knowledge, no such action or proceeding is pending in
the Supreme Court, the Court of Appeals or any other
tribunal or agency, and that, if I should learn thereafter that
a similar action or proceeding has been filed or is pending
before these courts or tribunal or agency, I undertake to
report that fact to the Court within five (5) days therefrom.

105

IN WITNESS WHEREOF, I have hereunto set my hand
this ______ day of______________________, 20___.

_______________
Affiant

SUBSCRIBED AND SWORN to before me this _____ day
of _________________, 20___.

NOTARY PUBLIC

106

FORM 2-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No. _____________
For : _____________________
___________________________
Defendant.
X---- ------------------x
107

SUMMONS
To : _______________
________________
________________
GREETINGS:
You are hereby required, within ten (10) days from
receipt of this Summons, to file with this Court and served on
plaintiff, your verified Response to the attached Statement of
Claim. The form of the required Response is attached hereto.
You are required to submit with your Response copies of
documents as well as affidavits of any witness to stand as your
evidence in this case. You must present the original documents
on the day of the hearing.

108

A motion to dismiss is prohibited and shall not be
entertained.
Your failure to respond within the 10 day period will
authorize the Court to render judgment based solely on the
Statement of Claim.
Witness my hand under the seal of this Court, this _____
day of ________________, 20___ at _______________,
Philippines.

BRANCH CLERK OF COURT

109

FORM 3-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 110

RESPONSE
Defendant/s respectfully allege/s:
3. Defendant admits all the allegations in paragraph/s ______
of the Statement of Claim.
4. Defendant specifically denies all the allegations in
paragraphs ______of the Statement of Claim.
5. Defendant opposes the grant of the prayer in the Statement
of Claim for the following reasons, as supported by the
attached documents and affidavits: (enumerate defenses)
6. As the Statement of Claim is baseless, defendant is entitled
to the following counterclaims:

111

______ Actual Damages of Php __________________
______ Moral Damages of Php __________________
______ Exemplary Damages of Php________________
______ Cost of suit
Prayer
WHEREFORE, defendant respectfully prays for
judgment to be rendered dismissing the Statement of Claim,
and granting the counterclaims, ordering plaintiff to pay
defendant the following sums:

112

_____ Actual Damages of Php _________________
_____ Moral Damages of Php __________________
_____Exemplary Damages of Php ________________
_____ Costs of Suit.
DEFENDANT
(VERIFICATION AND CERTIFICATION
ON NON-FORUM SHOPPING, if with permissive
counterclaim)

113

FORM 4-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 114

NOTICE OF HEARING
Once issues and joined upon the filing of the defendant’s
Response, this case will be called for Judicial Dispute Resolution
(JDR) and hearing before the Presiding Judge of this Court on
_____________ at ________________.
Failure of the plaintiff to appear at the JDR and hearing
shall cause the dismissal of the Statement of Claim, and the
defendant who appears shall be entitled to a judgment on his
counterclaim. On the other hand, failure of the defendant to
appear at the JDR and hearing shall cause the Court to render
judgment based solely on the Statement of Claim.

115

A party may not be represented by a lawyer, but may
authorize any other representative to appear in his behalf
and participate in all the proceedings as if the party
represented were present. For this purpose, the required
authority should be evidenced by accomplishing the
attached Form 5-SCC (Special Power of Attorney).
WITNESS the HON. __________________, Presiding Judge of
this Court, this _____ day of ______________, 20___ at
_________________, Philippines.

BRANCH CLERK OF COURT

116

FORM 5-SCC
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, ___________________, of legal age, single/married, with
residence at _________________________ do hereby appoint,
name and constitute ___________________________, likewise of
legal age, single/married, with resident at
________________________, as my true and legal representative
to act for and in my name and stead and to represents me during
the hearing of Civil Case No. ________________, to enter into
amicable settlement, to submit to alternative modes of dispute
resolution and to make admissions, or stipulations of facts and
documents with further consultation from me.

117

I hereby grand my representative full power and authority to
execute and perform every act necessary to render effective the
power to compromise as thought I myself have so performed it
and hereby approving all that he may do by virtue of these
presents.
In witness whereof, I hereunto set my hand this _____ day of
________________, 20____ , at _____________.

_________________
Principal
_________________
Agent

118

Witnesses: _____________________________________________
(ACKNOWLEDGMENT)

119

FORM 6-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 120

MOTION TO PLEAD AS INDIGENT
_____________________, unto this Honorable Court,
respectfully alleges that:
3. I am a resident of _______________________;
4. My gross income and that of my immediate family does
not exceed _________________;
5. I do not own real property with an assessed value of more
than (amount as provided in the Revised Rules of Court,
as amended) as shown by the attached Certification
issued by the Office of the City/Municipal Assessor and
the City/Municipal Treasurer’s Office.

121

1. Due to financial constraint, I cannot afford to pay for the
expenses of a court litigation as I do not have enough
funds for food, shelter and other basis necessities.
2. Should the court render judgment in my favor, the amount
of the docket and other legal fees which I was exempted
from paying shall be a lien on the judgment, unless the
court orders otherwise.
WHEREFORE, premises considered, it is respectfully
prayed that I be exempted from the payment of docket and
other legal fees as indigent pursuant to Section 21, Rule 3
in relation to Section 18, Rule 141 of the Revised Rules of
Court.

122

Other reliefs just and equitable under the premises are
likewise prayed for.

PLAINTIFF

123

FORM 7-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 124

MOTION FOR APPROVAL OF COMPROMISE
AGREEMENT
The parties respectfully allege that:
3. Plaintiff filed this claim against defendant for:
_____________ collection of sum of money
_____________ damages
_____________ civil aspect of criminal case
_____________ enforcement of barangay agreement
_____________ recovery of personal property
9. The parties have come to an amicable settlement and have
executed a compromise agreement with the following
terms and conditions.

125

(copy terms and condition here)
2. The parties agree that the approval of this agreement by
the Court shall put an end o this litigation, except for
purposes of execution in case of default.
WHEREFORE, premises considered, the parties
respectfully pray that the court approve this agreement
and render judgment on the basis thereof.
_______________________, 20 _____.

_______________________ ____________________
Plaintiff Defendant

126

FORM 8-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 127

JOINT MOTION
Plaintiff and defendant, unto this Honorable Court,
respectfully allege that:
3. Plaintiff and defendant have mutually and voluntarily
settled their claim and counterclaim to the entire
satisfaction of each other; and
4. The parties no longer have a cause of action against each
other.
WHEREFORE, premises considered, plaintiff and
defendant respectfully pray that the plaintiff’s statement
of claim and defendant’s counterclaim incorporated in his
response be dismissed.

128

Other reliefs just and equitable under the premises are likewise
prayed for:
__________________________, 20___.
___________________________ __________________
Plaintiff Defendant
To the Branch Clerk of Court:
Please submit the foregoing motion for the consideration of the
Court without hearing and further argument from the parties.
___________________________ __________________
Plaintiff Defendant

129

FORM 9-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 130

MOTION FOR EXEUCTION
Plaintiff/Defendant, unto this Honorable Court,
respectfully alleges that:
3. On _________________, a judgment was rendered by the
court, the dispositive portion of which reads:

5. The judgment is final and unappealable.
6. The defendant/plaintiff has not complied with the
judgment.
WHEREFORE, premises considered, it is respectfully
prayed that a writ of execution be issued to implement the
judgment of the court dated ________________
____________________________, 20 ___.
______________________
Plaintiff/Defendant 131

NOTICE OF HEARING
NAME OF DEFENDANT
(IF FILED BY PLAINTIFF)
NAME OF PLAINTIFF
(IF FILED BY DEFENDANT)
NAME OF CLERK OF COURT
Please be notified that the undersigned will submit the
foregoing motion for the consideration and approval of the
Court of _______________ at_____________________, 20___.

___________________
Plaintiff/Defendant

132

FORM 10-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 133

Agreement
Having failed to resolve the matter through Judicial
Dispute Resolution, plaintiff and defendant hereby agree that
Judge ________________________ shall continue with the
hearing on the instant matter and hereby waive their right to
have a different judge hear the case.
_______________________, 20_____.

_______________________ _____________________
Plaintiff Defendant

134

FORM 11-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 135

ORDER
In view of the failure of judicial dispute resolution and
there being no agreement from the parties to let the undersigned
continue hearing the instant case, the record of this case is
transmitted to the Office of the Clerk of Court for immediate
referral by the Executive Judge to the Pairing Judge for hearing
and decision pursuant to Section 21 of the rule of Procedure for
Small Claims Cases.
SO ORDERED.
_________________________, 20 ____.
________________
Judge

136

FORM 12-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 137

DECISION BASED ON COMPROMISE AGREEMENT
Plaintiff filed this case against defendant
___________________ in the amount of _______________.
Defendant denied plaintiff’s claim on the ground of
_____________________ and set up a counterclaim for
_______________________.
The parties, however, reached an amicable settlement
and submitted to the court a compromise agreement, the
terms and conditions of which are as follows:

138

It appearing that the agreement is not contrary to law,
morals, good customs, public moral and public policy, and
pursuant to Articles 2028 and 2037 of the Civil Code of the
Philippines, the same is hereby APPROVED and ADOPTED as
the Decision of this Court.
The parties are hereby ordered to faithfully comply with
the terms and conditions of the agreement.
________________________, 20___.

__________________
Judge

139

FORM 13-SCC
_____________________________
_____________________________

_________________________
Plaintiff,
vs Civil Case No.
_____________
For : _____________________
___________________________
Defendant.
X---- ------------------x 140

Defendant alleges that (state reasons for denial of the claim
and other material allegations in the Response including
counterclaims, if any).
On (date) both parties appeared during the hearing
conducted by (state name of Judge who conducted the JDR. State
whether parties appeared personally or through a specially
authorized representative).
Considering the failure of the parties to arrive at any
settlement of the dispute, this court proceeded with the
hearing of the case which was terminated on
_______________.
The issue to be resolved by this court is whether
____________________________________________.

141

Plaintiff’s evidence consists of; (state documents of
plaintiff, affidavit, submitted, if any , and statements made
by plaintiff and witnesses under oath during the hearing).
Defendant’s evidence consists of: (state documents of
defendant; affidavits submitted, if any, and statement made
by defendant and witnesses under oath during the hearing).
This court finds that the claim of plaintiff (or defendant
in a counterclaim) us(state whether meritorious or devoid of
merit). Under Article/Section (state the applicable provisions
of law) or pursuant to established jurisprudence (cite
applicable jurisprudence). In this case, this court found that
(state first the factual findings established by the evidence
and then the legal conclusions).

142

Wherefore, the (claim/counterclaim) is (granted/denied). The
court orders ________________ to pay to
____________________________ the amount of (state the monetary
award or damages) with interest of (if applicable under Civil Code
and/or settled jurisprudence) until fully paid.
jurisprudence
SO ORDERED.
(Date of decision.)

143

Signature
President Judge
(or Pairing Judge in the absence
of written agreement of the
parties that the case shall be
heard by the presiding Judge who
conducted the JDR.
Copy furnished:
All parties
Office of the Clerk of Court of _____________

144

Practical Suggestions To Improve Profitability in Marginal/
Delinquent Accounts

In-House Collection Force
Factoring / Credit cards
Organized Subsidiary To Collect
Network With a Collection Agency
Private Local Financing

145

- END -

(All Rights Reserved: No part of this seminar materials may be used, quoted reprinted and the like, without
prior written consent and permission from the author, Erdulfo S. Sison, and/or its publisher, Business
Assistance, Credit Corp. (BAGCO CREDIT), under penalty of the laws for unauthorized used copying and
dissemination.

146

Pilipinas Kong Mahal
ANG BAYAN KO’Y TANGING
IKAW
PILIPINAS KONG MAHAL
ANG PUSO KO AT BUHAY MAN
SA IYO’Y IBIBIGAY,
TUNGKULIN KO’Y
GAGAMPANAN,
NA LAGI KANG PAGLINGKURAN,

June 17, 2009
ANG LAYA MO’Y BABANTAYAN
147

Improving Profitability Through Credit Collection

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